When iPods quickly topped must-have gadget lists, many assumed Apple had the MP3 market cornered. But Dennis Gentles, founder of Klegg Electronics in Las Vegas, believed otherwise. In 2005, he launched his own version: the Klegg Mini. Within months of its debut, the Mini had sold out. Today, MP3 players make up 15 percent to 20 percent of the consumer electronics manufacturer's business.

Klegg Electronics sized up to Apple by sizing down its MP3 player. Gentles says the Klegg Mini is the smallest MP3 player that offers an FM radio and color displays. The company also competes with its lower prices and flexible approach. As Gentles, 33, explains, "We have the ability to come out with new adjustments and products quickly and find areas that Apple hasn't been able to infiltrate yet." With 2007 sales expected to reach between $3 million and $4 million, Klegg is coming into its own as a force to be reckoned with.